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The impugned offending words, “or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed supplier” appearing in Rule 89(4C) of the Central Goods and Services Tax Rules, 2017 as amended vide Para 8 of the Notification No.16/2020-Central Tax (F.No.CBEC-20/06/04/2020-GST) dated 23.03.2020 is declared ultra vires the provisions of the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017 as also violative of Articles 14 and 19 of the Constitution of India and resultantly, the same are hereby quashed.

Rule 89(4)(C) of the CGST Rules, 2017 – Refund — The Petitioner sought a writ of declaration declaring the provision of Rule 89(4)(C) of the Rules, as amended vide Para 8 of Notification 16/2020-CT dated 23.03.2020, as unconstitutional; and to quash impugned order passed by Respondent No. 3 in Form GST-RFD-06 dated 30.06.2020. The petitioner filed refund applications for refund of unutilized ITC under Section 54(3)(i). Meanwhile, Rule 89(4)(C) was amended w.e.f 23.03.2020. SCN dated 27.05.2020, 03.06.2020 and 04.06.2020 were issued on the ground that the petitioner had not given proof, which was required to be given in terms of the amended Rule 89(4)(C). The petitioner submitted that the amended Rule 89(4)(C) would not be applicable, as the period for which refund was being claimed (i.e., May 2018 to March 2019) was much prior to the amendment of Rule 89(4)(C). The court observed that the impugned amendment to Rule 89(4)(C) is illegal, arbitrary, unreasonable, irrational, unfair, unjust and ultra vires Section 16 of the IGST Act and Section 54 of the CGST Act because the very intention of the zero-rating it to make entire supply chain of “exports” tax free. The rule in whittling down such refund is ultra vires because Rules cannot override the parent legislation. Further, the Rule is violative of Article 14 and 19(1)(g) of the Constitution of India, as the quantum of refund of unutilized input tax credit is restricted only in cases falling under Section 16(3)(a) of the IGST Act, i.e., export of goods is made without payment of duty under a Bond/Letter of Undertaking(LUT); however, no such restriction is imposed on cases falling under Section 16(3)(b) i.e., in cases where export of goods is made after payment of duty. There is a hostile discrimination between two class of persons. The Rule 89(4)(C) suffers from the vice of vagueness for the reason that the words “like goods” and “similarly placed supplier” in the impugned Rule are completely open-ended and are not defined anywhere. The object of zero rating would be lost if exports are made to suffer GST.

Held that:- The Hon’ble High Court quashed the impugned amended Rule 89(4)(C) and also, quashed the impugned order dated 30.06.2020 and directed the respondents to accept the refund applications of the petitioner and grant refund in favour of the petitioner together with applicable interest within a stipulated time frame.